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2018 (4) TMI 307 - ITAT DELHIAddition u/s 40A - sum total of the debit entries that are not carried to the regular books of accounts - entitled to the benefit of set off of the surrendered amount - Held that:- No reason not to agree with the statement of the learned AR on this aspect of law and adjustability of the peak amount and the other amount of ₹ 6,35,000/- from out of the surrendered amount of ₹ 1,65,60,000/- subject to the verification of such amount at the end of the AO. Whether or not the assessee claimed any of the debit entries as allowable expenditure has to be verified by the AO to see whether or not the provisions u/s 40A(3) are applicable so also the AO has to verify from the entries of the ledger A3 & A11 to calculate the peak amount - direct the AO to verify whether any expenditure relatable to the un-carried entries in Annexure 3 & 11 and if there is any such expenditure claimed to calculate the net amount of the credit and debit entries so as to adjust the same from out of the surrendered amount. While making such adjustments, the AO will consider the possibility of adjusting the amount of ₹ 6,35,000/-. We, therefore, allow the grounds of appeal of the assessee for statistical purposes. Set off of the surrendered amount - Held that:- As in the preceding paragraphs, we direct the learned AO to verify whether any expenditure was claimed in respect of the debit entries of Annexure 3 & 11 and then to decide the applicability of Section 40A(3). The observations of the learned CIT(A) would be subject to such finding of the learned AO after verification. We, therefore, do not find any merit in the contention of the revenue that no set off should be allowed in respect of the surrendered amount from out of the amount ultimately found to be taxable. We reject this ground.
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